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If horoscopes can be believed, Kim Jong-Un, who shares a birthday with Elvis Presley and David Bowie, is competitive, stubborn and really likes all this attention he's getting. However, the 30-year-old North Korean dictator hogs the global stage not by wiggling his hips or making music, but by making threats of nuclear war against his neighbors and the U.S.

Little Kim's chest thumping will intensify Monday, which is the birthday of Pyongyang's founding father, Kim Il-Sung, and a day reserved for loud flexing of military muscle in the hopes someone will notice. A quarter of the $11.4 trillion of U.S. Treasuries outstanding are bought or owned by countries nudging North Korea, so unrest in the Far East can affect us economically. So why aren't markets flinching?

Military experts can't agree about North Korea's nuclear capability. Late last week, the Pentagon upgraded the threat and says Pyongyang may have developed nuclear devices small enough to attach to a ballistic missile, although it doubts the weapon is reliable. Clearly, North Korea wants to be designated a major nuclear power, "but let's call it what it really is–an unsafe, noncompliant nuclear experimenter," says Bruce Bennett, a senior defense analyst at Rand who specializes in North and South Korea. Pyongyang won't be able to wipe out Los Angeles unintercepted, and many Americans liken the menace, as Bill Maher says, to being barked at by a Chihuahua across a parking lot. But it can still do damage to nearby hubs like Seoul or Tokyo.

For now, Japan's surging Nikkei index, up 5.1% last week and 63% since June, is dismissing Kim's rants as braggadocio, and rightly so. A relic from the Cold War, North Korea's economy ranks 125th in the world, just behind Papua New Guinea's. It has trouble feeding its people, and relies on international aid for food and China for fuel. Even its allies seem to weary of Kim's antics, with neither China nor Russia opposing recent sanctions against the regime.

The problem, of course, is the difficulty in handicapping idiocy. Here's a young tyrant eager to demonstrate his street cred, and whose idea of publicity is to be photographed cavorting with Dennis Rodman. Good judgment may not be his best quality. The potential exists, however slim, for an escalating cycle of provocation from which no one wants to back down. That's why U.S. and South Korean armed forces are taking steps to prepare for the worst, even as rallying stock markets continue to hope for the best.

HOUSING MADE UP JUST 2.4% of our gross domestic product last year, down from 6.1% in 2005. But as the foundation on which many Americans build their wealth, its psychological heft is far greater. This year, the spring selling season has been delayed by winter storms and frigid March temperatures. With home builders up 73% over the past year, and home-improvement retailers up 37%, will the next two months live up to expectations?

Scott Wren, a senior equity strategist at Wells Fargo Advisors, thinks home prices will continue to improve. For a start, the supply of existing homes for sale is tight. Construction shrank after the bust and inventory recently fell to the lowest level in 13 years. At the current pace of sales, the inventory could be exhausted in just over four months. Median home prices fell 33% between their mid-2006 peak and early-2012 bottom, and the price of the median home today is where it was around 2002. This means many Americans who bought homes in the past decade might not want to sell at a loss.

At the same time, demand is pent-up and thawing. Mortgage rates on 30-year loans are below 3.5%, and potential buyers must wonder if borrowing costs will rise as macro-economic fears recede. The S&P/Case-Shiller index of home prices across 20 cities plunged 29% after the housing bubble burst, but it has since repaired 9%. The combination of tight supply and rising demand should support prices, even if the former keeps a lid on volume.

THE STANDARD & POOR'S 500, meanwhile, continues to barrel toward 1600, thanks to more liquidity from global central banks, and retreating commodity costs that give them license to keep printing money. The latest leg may have been boosted by capital flowing out of Japan looking for yield. Yet the longer we go without a pullback, the bigger a correction might be when it eventually comes.

How much money will be printed before the government finally wrestles our unemployment rate below the 6.5% target, and where will the S&P 500 be when that happens? The pool of Americans employed or actively looking for work has fallen to a 35-year low. Wall Street is booming, Main Street is not. Highlighting the divergent rewards for capitalists and workers seems like something Kim Jong-Un might do, but it does raise a question. "What are the consequences of this unprecedented, historic liquidity and market intervention by central banks in the coming years?" asks Michael Hartnett, BofA Merrill Lynch's chief investment strategist. "No one knows." In time, all this liquidity might end in a bond crash, or inflation, or a new housing bubble as investors seek out real assets. In other words, it's the danger within.